n the past month, I have seen over 150 pitches by various companies. Most of the time, they are to a panel of VCs, angel investors, and startup lawyers. Like most things we see over an over again--after a while--patterns emerge. So, it is after many pitches and questions that I'd thought I'd share the most common questions asked by potential investors. Enjoy!
1.) What is it that you do?
hough this may seem obvious, it's a legitimate question. In the heat of the moment, when your pitching your heart and soul, people often make the product or company way more complicated than necessary. It's not uncommon at the end of a tense few minutes for an investor to say, "I still don't get what you do, you have one sentence, go." My advice, keep it sweet, keep it simple, and don't confuse your audience!
2.) How am I going to make money?
Another obvious question, yet frequently neglected. Put yourself in the investor's seat. When you consider purchasing a stock, you would expect to know it's financials and what dividends you will receive as a shareholder of the company. This is no different when you pitch a company. You may be over the moon about your product, but unless you can explain to an investor how they will make a return on their investment, your excitement may be in vain. Remember, you are pitching an investment opportunity, not just a product.
3.) What's the problem your solving?
So, you've finally created an app that tells you how much your dog weighs on an asteroid. Awesome. But at the same time.. who really cares? I don't mean to sound harsh, but investors want to sleep well knowing there will be demand for your product or service. If you're pitching your company, make sure you know why your company was started in the first place, then share that with your audience.
4.) Tell me about your team?
This one is critical! You wouldn't buy a movie ticket to a movie with a lousy cast or a book from an uninspiring author. So, why would you invest in a company with a underwhelming or unknown team. Providing some information about you and your team at the beginning of your pitch establishes your credit with potential investors and makes your relationship much more personal.
5.) What's the business model?
Investors want to know how you make money. They have to know this answer before they are going to lay their own money on the line. That said, it's amazes me how many times overly eager entrepreneurs accidentally leave this out of their presentation. The clearer you explain how your company makes money, the easier it is for investors to see how they will return their investment.
6.) How are you and your team different?
veryone is different. Therefore, every company, team, and product are different in some way. Yet, when pitching your idea, you want to highlight these differences as much as possible. Investors want to know why they should believe in you and your team, rather than your competitor. So, my advice is to know what you do better than your competitors, and make sure your audience is aware as well.
7.) What are the barriers to entry?
his goes along with number five, but is still a very critical piece of information that investors want to know. If you've come up with an amazing product or service, what's stopping others from taking your idea? I think Warren Buffett said it best when he said he likes companies with "moats" around their products. What's your moat?
8.) Can you give ma a use case?
Sometimes the best way to explain what you do is to provide what investors call "a use case". These often start with something like, "Imagine a world..." Though it doesn't always work, and can come off a bit lofty, a simple use case is a great way to concisely explain what you do, and what problem you are solving.
9.) Do you have any "skin in the game"?
Investors are skeptics by definition. As you pitch, it is your duty to make them feel more comfortable about your company. One way ease potential investor nerves is to show that you are betting on yourself. If you (the entrepreneur) don't believe in your own vision, how can you convince a panel of VCs? So, even though it's not required, investors do like to see that you are financially committed to your success.
10.) Have you had any traction?
ast but certainly not least is about traction. Remember that app that you made about your dog's weight on an asteroid? Well, are people using it? If you can show your audience a growing number of repeat customers, you're on to something. Investors want to see you succeed, and assessing your "traction" is a valuable way to see if your entrepreneurial ideas are working.